Boston, MA 07/10/2014 (wallstreetpr) – Glu Mobile Inc. (NASDAQ:GLUU), publisher of mobile games mostly based on action and adventure storyline, is riding high on the hype of its newly released game known as Kim Kardashian: Hollywood.
Although the stock is already up nearly 44 percent since the release of the game on June 25, it is not hard to see heightened investor concern.
Stocks riding on the hype generated by popular products is a common phenomenon on Wall Street. The problem is that hype-based gains don’t last long, at least if the experience from other game publishers like Zynga Inc (NASDAQ:ZNGA) is anything to consider.
Zynga’s concept of social media games that launched on popular sites like Facebook Inc (NASDAQ:FB) earned it widespread traction on Wall Street. However, reliance on just a handful of popular games saw the stock fade away. Zynga (NASDAQ:ZNGA) is down more than 20 percent year-to-date. The company has even closed Facebook offering of some of its legacy titles.
Sustaining revenue growth
Given that investor concern about games companies is based on the ability of a company to keep developing captivating titles that can sustain revenue growth, Glu Mobile Inc. (NASDAQ:GLUU) must address that concern by bringing to the market popular titles in quick succession.
Kim Kardashian: Hollywood is already hitting on popular app stores such as Apple Inc’s (NASDAQ:AAPL) U.S. App Store where the game rose to be the second most-downloaded free-to-play game.
According to Douglas Greutz, an analyst with Cowen & Company, Kim Kardashian: Hollywood has the potential of hitting $200 million in annual revenue. They have a Buy rating on the stock with a price target of $6 apiece.
Glu Mobile Inc. (NASDAQ:GLUU) went public in March 2007 where shares were offered at $11.50 apiece. The shares peaked in June the same year to $14.67. However, things have not been the same since then, and the stock currently trades in the range of $5.46, rising nearly 7.1 percent in the last session, the highest gain in nearly four months.